Libor for Dollars Climbs; Three-Month Rate Snaps 23-Day Decline

 

2008-11-13 12:29:04.590 GMT

 

By Anchalee Worrachate

 

     Nov. 13 (Bloomberg) -- The cost of borrowing dollars for three months in London rose, snapping a 23-day decline, signaling policy makers have yet to succeed in thawing the global credit freeze.

 

     The London interbank offered rate, or Libor, that banks say they charge each other for such loans increased almost 2 basis points to 2.15 percent today, according to British Bankers'

 

Association data. The last time the rate climbed was Oct. 10. The overnight rate also climbed 2 basis points, to 0.40 percent, or 60 basis points below the Federal Reserve's target rate.

 

     Declines in money-market rates may be slowing amid signs the financial crisis will persist and is spreading to the global economy. U.S. Treasury Secretary Henry Paulson said yesterday he plans to use the second half of the $700 billion financial-rescue program to help relieve pressures on consumer credit, scrapping an effort to buy devalued mortgage assets.

 

     ``There's still a lot of uncertainty, especially after the change in the U.S. rescue plan,'' said Alessandro Tentori, a fixed-income strategist in London at BNP Paribas SA. ``The perception in the market will change.''

 

     The global hedge-fund industry lost $100 billion of assets in October, according to an estimate from Eurekahedge Pte, as firms including Sparx Group Co. and Man Group Plc were hammered by investor redemptions.

 

                         `Market Skittish'

 

     ``Whilst Hank Paulson's rethink on buying bad mortgages may be right thinking, it's the wrong time,'' said Felix Riley, head of binaries at the ChoiceOdds unit of MF Global in London.

 

``Paulson is making the market skittish.''